Mortgage Caps Lifted Effective March 1st

March 28, 2008

The maximum mortgage limits (caps) placed on Fannie Mae and Freddie Mac, the two giant government-sponsored buyers of existing mortgages have been lifted, effective March 1, it was announced by the Office of Federal Housing Enterprise Oversight (OFHEO). The caps had been instituted several years ago when the enterprises encountered problems resulting from their "creative accounting standards."

The action was primarily motivated by pressure from the mortgage industry and some Congressional committees to lift the caps in order to free up more money for mortgages. The caps have limited the ability of the enterprises to purchase packages of residential mortgages that might not otherwise find a market in today’s credit situation.

Posted in Lending, Real Estate